Nationwide Building Society profits fall by 6% as Brexit bites

Lower consumer spending since the UK's vote to leave the European Union hits the building society

Nationwide expects a squeeze on profits to continue (PA Wire/PA Images)

Nationwide Building Society on Friday reported a 6 per cent fall in nine-month statutory pretax profit, hurt by lower consumer spending following the UK’s vote to leave the European Union.

Britain’s second-biggest mortgage provider posted a profit of £886m for the nine months which ended on December 31, down from £946m a year earlier.

While the economy remained resilient immediately after the country’s June 2016 EU vote, there were signs of a slowdown in 2017, it said.

“Household spending, a key driver of growth, lost some momentum. Retail sales and car registrations have slowed and consumer confidence has also softened,” chief executive Joe Garner said.

Subdued economic activity and a squeeze on household budgets will continue to pressure house prices and profits, Nationwide said.

Nationwide said its net interest margin, or the gap between what it pays savers and what it charges borrowers, remained steady at 1.33 per cent but would likely fall this financial year and next.

Its cost to income ratio rose to 59.6 per cent from 57.6 per cent on higher defined benefit pension costs.

Reuters